Peugeot To Pull Out Of Market In the U.S.

Published: August 7, 1991

PARIS—
Peugeot SA will stop manufacturing cars for the U.S. market in September, company officials said Tuesday, marking the latest failure of a top European automaker to win over American buyers of midrange automobiles.

A Peugeot spokesman said the withdrawal had been prompted by the failure of the company's 405 model sedan to gain a significant share of the U.S. market.

Last year Peugeot sold just 4,261 cars in the United States, about 70 percent of them 405s, compared with a total of 14,336 in 1986.

Through July, Peugeot sold 2,223 cars, compared with 2,701 in the first seven months of last year.

An offer of free credit earlier this summer apparently failed to have the hoped-for effect of increasing sales.

Peugeot, which turns out both the Peugeot and the Citroën, joins such other European car companies as Renault and Ford's German operation in admitting defeat in the highly competitive midsize segment of the American market.

Peugeot sales in the United States have been dwindling for five years.

The company - Europe's third in sales after Fiat and Volkswagen - had hoped the introduction of the sporty 405 a couple of years ago would give a lift to sales.

The company had planned later to introduce the big brother of the 405, the 605, but the spokesman said Tuesday that Peugeot had now decided not to go ahead.

Peugeot produced 1.4 million cars last year, and both the 405 and 605 have sold well in Europe.

The spokesman blamed the competition between American and Japanese automakers in the U.S. market for the failure of the 405.

"The American market is depressed and in conflict between U.S. and Japanese producers, and all the European automakers are caught in the vise," he said.

Stephen Reitman, automotive analyst at UBS-Phillips & Drew in London, said the 405's pricing had been "high relative to other manufacturers."

He also observed that Peugeot's dealer network in the United States, after the very modest performance of the previous standard-bearer, the 505, had cooled on the Peugeot make.

"Peugeot was typically a fourth brand, behind a dealer's other European or American makes," he said.

"It was usually relegated to a small, dusty corner of the showroom."

Peugeot has sent a letter informing its 151 American franchisees of the decision.

"We will continue to ship cars that are already in the pipeline, and our dealers still have an inventory of cars to sell," said Kim Derderian, of Peugeot Motors of America Inc. in Lyndhurst, New Jersey.

Ms. Derderian said Peugeot's American operations would continue to supply parts and service for the 60,000 Peugeots she estimated were still on the road in the United States.